Software License Agreement

EXHIBIT 10.36
-------------


VERISITY DESIGN, INC.


Software License Agreement


This Software License Agreement ("Agreement") is entered into effective as of January 18, 1999 (the "Effective Date"), by and between VERISITY DESIGN, Inc., a California corporation ("Licensor"), and Intel Corporation, a California corporation ("Licensee") with reference to the following:


Background


A. Licensor is the creator of the certain software programs generally known as Specman, as more fully described in Exhibit A attached hereto (the "Licensed Program").


B. Licensee desires to obtain (i) a license to the Licensed Program and such separate printed documentation ('Documentation") as Licensor generally makes available to its licensees in connection with the Licensed Program, and (ii) access to certain maintenance and technical support services in connection with the Licensed Program, and Licensor desires to grant such a license and provide such services on the terms and conditions set forth in this Agreement.


C. This Agreement is limited to the [*] Specman licenses acquired by Intel from the purchase of the [*] hardware design team known as [*]. Future Intel purchases of Verisity software will be subjected to a separate negotiated agreement.


NOW THEREFORE, the parties agree as follows:


1. License. Subject to Licensee's compliance with the terms and
------- conditions of this Agreement. Licensor grants to Licensee, and Licensee accepts from Licensor, for each Licensed Copy (as defined below), a nonexclusive, nontransferable license to load the executable form of the Licensed Program into computer memory, and execute the same within a single central processing unit ("CPU") associated with such memory, provided that (i) no more than that number of copies of the Licensed Program as Licensee has paid the applicable License Fee as specified in Exhibit A (each, a "Licensed Copy") may be simultaneously
--------- loaded into computer memory and executed on an associated CPU; (ii) such memory and associated CPU must be owned or leased by Licensee, and must be physically located at the Delivery Site specified in Exhibit A; and (iii) Licensee will
---- --------- make no use of the Licensed Program for other than its intended uses that are directly related to the internal business operations of Licensee, and will not make any use


[*]- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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thereof to offer the benefits or services of the Licensed Program to third parties, whether such arrangement is in the nature of a service bureau, out- sourcing service, joint development relationship or any other similar service or business. In addition to the foregoing, Licensee acknowledges and agrees that in order to enforce the limitation on the number of Licensed Copies which may be simultaneously loaded and executed, the Licensed Program includes license management software which is only effective if all CPUs on which the Licensed Program operates are at all times capable of communicating via a local area network or a wide area network if applicable WAN upgrade has been purchased (but not a dial-up network) with the license management software; therefore, the Licensed Program may not be executed on any CPU which is not in direct communication at all times with the license management software on such a network. Licensee may make and hold two copies of the Licensed Program for temporary backup use and/or archival purposes. All of Licensee's rights to use the Licensed Program are expressly stated herein; there are no implied rights.


2. Additional Restrictions. Licensee may not use, copy, modify,
----------------------- display, sublicense or print the Licensed Program or the Documentation, in whole or in part, except as expressly provided in this Agreement. Without limiting the generality of the foregoing, Licensee will abide by the following additional restrictions on the use and copying of the Licensed Program and Documentation:


(a) No Modification. Licensee will not make any modification to, or
--------------- adaptation of, the Licensed Program or the Documentation nor merge either of them into any other programs or other materials. Licensee will have no access to, or rights or license to modify, the source code for the Licensed Program, except as expressly set forth in Exhibit B attached hereto. Licensee will not
--------- attempt, or allow others under its control to attempt, to obtain or derive information from or about the Licensed Program through disassembly, decompiling, reverse engineering or other means.


(b) Markings. All titles, trademarks, copyright notices and other
-------- proprietary markings must be reproduced on all permitted copies of the Licensed Program. Licensee will not remove such titles, trademarks, copyright notices or other proprietary markings.


3. Proprietary Matters.
-------------------


(a) Ownership. Licensee acknowledges that the Licensed Program and the
--------- Documentation, including all associated copyrights, patents, trademarks, trade secrets and other intellectual property and proprietary rights with respect thereto, are, and at all times will be, the sole property of Licensor and its


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licensors, even if suggestions made by Licensee are incorporated into subsequent versions of the Licensed Program or the Documentation.


(b) Confidential Information. Licensee acknowledges that the Licensed
------------------------ Program and the Documentation, including without limitation all aspects of the Licensed Program (e.g., the source code, methods of processing, specific design and structure of individual programs and their interaction and unique programming techniques employed therein as well as screen formats) constitute valuable trade secrets of Licensor and its licensors. Licensor and Licensee acknowledge that, in the course of dealings between the parties, each parry will acquire information, identified as confidential, about the other party, its business activities and operations, its technical information and trade secrets, of a highly confidential and proprietary nature. Each party will hold such information, which is identified as being confidential, and Licensee will hold the Licensed Program and the Documentation, as well as the terms of this Agreement, in strict confidence and will not disclose or reveal the same to third parties except for any information generally available to or known to the public, independently developed outside the scope of this Agreement, lawfully disclosed by a third party, or required to be disclosed to a tribunal, provided that in the case of required disclosures to tribunals, the receiving party will notify the disclosing party prior to such disclosure to allow the disclosing party to obtain protective orders maintaining the confidentiality of such information. Notwithstanding the foregoing, Licensee is not prohibited from using the Licensed Program in the intended operational environment where the operation of same may be observed by persons other than Licensee.


4. Maintenance And Technical Support Services. For such periods as
------------------------------------------ Licensee fully pays the Annual Maintenance Fee as described in Section 5(b) below, Licensor will provide the services to Licensee as are described in Exhibit B attached hereto (the "Services"). ---------


5. License Fee; Maintenance Fee.
----------------------------


(a) License Fee. In consideration for the licenses granted to Licensee
----------- in this Agreement, Licensee will pay to Licensor the License Fee set forth in Exhibit A with respect to each Licensed Copy of the Licensed Program. Upon --------- delivery of the Licensed Program to Licensee's Delivery Site, Licensor will
---- deliver an invoice to Licensee setting forth the applicable Licensee Fee and the Initial Maintenance Term's Annual Maintenance Fee as set forth in Exhibit A, and
--------- Licensee will pay the same in full within [*] business days after receipt of such invoice.


[*]- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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(b) Annual Maintenance Fee. In consideration for the Services to be
---------------------- performed by Licensor as described in Exhibit B, Licensee will annually pay to
--------- Licensor a fee (the "Annual Maintenance Fee"), to be determined and paid as follows:


(i) The Annual Maintenance Fee payable with respect to the Initial Maintenance Term (as defined in Section 6(b) below) will be paid with the License Fee invoiced to Licensee and payable pursuant to Section 5(a) above.


(ii) The Annual Maintenance Fee payable with respect to each Renewal Maintenance Term (as defined in Section 6(b) below) will be invoiced by Licenser to Licensee at least [*] days before the expiration of the prior Maintenance Term, and must be paid in full within [*] days after the invoice dare.


(iii) Because the cost of providing Services depends on a number of unpredictable facts, such as the magnitude of improvements in New Releases, Licenser may adjust the Annual Maintenance Fee for any Renewal Maintenance Term by written notice to Licensee prior to the expiration of the immediately prior Maintenance Term.


(iv) Licensee will not have the option of paying the Annual Maintenance Fee with respect to less than the total number of Licensed Copies of the Licensed Program, except to the extent that (A) Licensee wishes to terminate the Services entirely as provided in Section 6(c) below, or (B) Licensee notifies Licensor that the scope of the license granted in Section 1 is to be reduced to include only that number of Licensed Copies as to which Licensee has paid the Annual Maintenance Fee, as provided in Section 6(c) below.


(c) Form of Payment; Taxes; Late Payments. All payments are due in
------------------------------------- United States dollars. The amount of the stated License Fee and Annual Maintenance Fee do not include any taxes, duties or other governmental charges levied or which may be levied in respect of such fees or the services performed hereunder. Licensee agrees to pay all such taxes, duties and governmental charges, regardless of when they may come due, or to reimburse Licensor for same if Licensor is required by applicable law to collect and pay over same to the relevant taxing authority. Licensor reserves the right to apply a service charge to the unpaid balance at the rate of [*] per month (but in no event more than the maximum rate allowed by law) for any fee or other amount not paid within [*] days after the due date. In addition, if Licensee fails to pay any invoice when due, Licenser will have the right to institute collection procedures to recover same and all costs incurred by Licensor will be paid by Licensee.


[*]- CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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6. Term and Termination.
--------------------


(a) License Term. The term of this Agreement and the licenses granted
------------ hereunder will be perpetual upon payment of the License Fee with respect to each Licensed Copy, unless terminated by Licensee as provided in this Agreement, and may only be revoked by Licensor if Licensee materially breaches any of its material obligations this Agreement.


(b) Maintenance Term; Renewal. The Services obligations of Licensor
------------------------- under Section 4 above will commence upon the delivery of the Licensed Program to Licensee ("Commencement") (provided that Licensee has paid the Initial Maintenance Term's Annual Maintenance Fee) and will expire at the end of business on the date [*] from Commencement (the "Initial Maintenance Term"). Such Services obligations will automatically renew on the [*] of Commencement each [*] during the term of this Agreement for additional [*] periods (each, a "Renewal Maintenance Term"), provided that Licensee pays the applicable Annual Maintenance Fee prior to the due date therefor, provided that any Renewal Maintenance Term commencing after [*] from Commencement of the Initial Maintenance Term must be by mutual written agreement of the parties. Reinstatement of lapsed Services will be subject to the payment of applicable reinstatement fees equal to the prorated sum of Maintenance Fees which would have been payable during the lapsed period plus [*]%.


(c) Termination. Licensee may terminate its right to obtain the
----------- Services under this Agreement at any time upon written notice to Licenser, subject to compliance with the provisions of this Section 6. Licensee may also terminate the license granted in Section 1 above as to any Licensed Copy of the ...